Carole Nash Classic Insurance Specialists

India Watch : S&P cuts Tata Motors’ credit rating

Paul McVeigh, Automotive News Europe, 25th March, 2009

Standard & Poor’s Ratings Services today lowered its corporate credit rating on India-based automaker Tata Motors Ltd. to B+ from BB-.

Standard & Poor’s said the action followed a deterioration in Tata Motors’ cash flows during the economic downturn, which, combined with significantly high debt levels, will affect the company’s credit protection measures.

Standard & Poor’s said the newly launched Nano has the potential to benefit to Tata Motors’ cash flows but not until main Nano production factory in Gujarat, India, starts full production in 2010.

The ratings agency said Tata Motor’s Jaguar and Land Rover brands have been severely affected globally by weak demand for cars. The brands “continue to register volume declines and that is expected to prevail for the rest of 2009,” the agency said.

Tata Motors bought Jaguar and Land Rover from Ford Motor for $2.3 billion in June 2008.

Standard & Poor’s said the newly launched Nano has the potential to benefit to Tata Motors’ cash flows but not until main Nano production factory in Gujarat, India, starts full production in 2010.

Reuters contributed

[Source: Automotive News Europe]

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